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Monitoring and Evaluation of Production Partner Factories

Last Updated: 2021.02.26
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Fast Retailing believes that respect for human rights and labor laws and improving labor environments are among our most important responsibilities. We created our Code of Conduct for Production Partners to serve as a guide in monitoring labor conditions.

Workplace Monitoring

Partner Factory Monitoring Program

Fast Retailing maps and monitors all sewing factories as well as key fabric mills for human rights abuses, poor labor conditions, environmental preservation practices, and more as per our Code of Conduct for Production Partners. We do this 12 months after the notification date of the previous audit result. We disclose the results of our audits to the public. We contract with third-party entities to perform regular audits which are mainly unannounced. When improvements are required, at times we send Fast Retailing personnel to visit the site in person, helping our partners to implement measures for improvement. We perform due diligence of potential new partners to identify and improve any labor and environmental issues as early in the process as possible.

The Supply Chain Labor Management Team from our Sustainability Department (hereinafter Sustainability Department) leads a workplace monitoring program and other supply chain social initiatives across all Fast Retailing brands. The managers of the Sustainability Department manage the programs and work plans, and report to the Executive team, who oversees the strategic direction of the Sustainability Department. The Supply Chain Labor Management Team members are based in Japan, where our headquarters are located, as well as in key production countries such as China, Vietnam, Indonesia, Bangladesh and Turkey. This is to ensure proper communication with not only our partner factories' management and workers, but also local individuals and groups in their local languages. Twice a year as part of the company's evaluation system, the Group Officer, managers and team members are appraised on their performance of supply chain-related social initiatives as part of our efforts to promote our human rights policy commitments. This evaluation is a factor used to determine remuneration of these individuals.

In 2015, we began performing audits under the Better Work system, a program managed jointly by the International Labor Organization and the International Finance Corporation. Adopted widely in the apparel industry, Better Work monitoring eliminates duplications in factory audits, letting companies focus mainly on improving labor conditions.

In 2015, Fast Retailing joined the Fair Labor Association (FLA) which has provided support in adopting FLA labor environment standards throughout the entire supply chain, evaluated our monitoring activities related to labor conditions, provided guidance for improvement, and encouraged us to dialogue and engage with stakeholders, including member brands, factories, and Civil Society Organizations to tackle issues related to labor conditions.

In February 2019, the FLA accredited the Fast Retailing labor factory monitoring program. Participating companies with accredited monitoring programs have demonstrated that they have the systems and procedures in place needed to successfully uphold fair labor standards throughout their supply chains.

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Workplace Monitoring System

Factory monitoring process

Fast Retailing conducts regular workplace audits, assigning partner factories a letter grade from A to E. The Fast Retailing audit tool and Monitoring Program Manual include processes to conduct worker interviews, consult with unions and worker representatives, review collective bargaining agreement terms, conduct management interviews, review documents, conduct visual inspections, and review occupational health and safety.
We assign a grade of A to partner factories that comply with our Code of Conduct for Production Partners and commit zero notable violations. A partner factory with a B grade is one that has committed relatively low-risk violations. When we believe a partner factory may have committed a violation of human rights or local occupational health and safety laws (e.g. masks, gloves, or other protective equipment not provided to workers as needed), we assign that partner a grade of C. Partner factories assigned a grade of D are those that have committed major violations of human rights, occupational health and safety, or wage and benefit matters (e.g. locked emergency exits, errors in wage calculations). We conduct follow-up audits for partners that have committed C or D grade violations. If violations are not remedied to our satisfaction, we may reduce our business volume with the partner, or even terminate business relations altogether. We assign a grade of E to those partner factories that are found committing major violations, including child labor, forced labor, or other human rights violations. Significant violations of occupational health and safety also merit a grade of E. When C or D grade violations are not resolved in follow-up audits or E grade violations are found in an annual audit, we escalate these matters to the Fast Retailing Business Ethics Committee, which discusses the potential impact on the financial situation of the partner in question and the risk of workers' dismissal. The committee then determines whether to terminate or modify our business relationship and makes recommendation to the Production department. Every fiscal year, Fast Retailing strives to avoid such scenarios by closely monitoring factories and preventing repeated C or D grade or E grade violations.

To identify risks in the supply chain, we evaluate production partners and send Fast Retailing personnel to visit factories in person, clarifying the degree of risk present. We define factories as high-risk when we find issues related to lack of transparency (falsified reports, etc.), disputes between labor and management, human rights violations, or other concerns. For such factories, we will engage a third-party entity to conduct an audit and send Fast Retailing personnel more frequently to assess our understanding of the causes of these issues and address them.
Also, we place a particular importance on engaging unions and worker representatives for addressing potential risks in factories' working environments. Fast Retailing's monitoring program therefore includes various protocols to gain the understanding of union structures, including inviting union and/or worker representatives to the opening and closing meetings of the audit, including representatives in the interview process, and requiring a follow-up process to verify remediation and preventive measures after a critical issue in which the union was affected.
Fast Retailing's Monitoring Program Manual and Supplier Guidebook include the remediation process, timelines following the completion of audits at the facilities and root cause analysis. Additionally, we provide guidance and resources for facilities to understand various root cause analysis methodologies, including the FLA's guidance on root cause analysis, so preventive measures are set. Overall audit results and most-frequent findings are disclosed on our website and communicated with our business partners and internal procurement-related departments at each of our brands.

We assess the effectiveness of our monitoring program by analyzing the results of annual audits conducted by third party auditors. Based on this analysis, we set clear goals to reduce issues in key focus areas such as health and safety, wages and benefits, and working hours. The Fast Retailing Hotline for partner factory workers is an important tool to identify any potential new issues in between these audits. At least twice a year, trends and risks identified through the monitoring program and other initiatives, including critical issues relating to salient risks, country and region-specific risks and follow-up assessment of high-risk factories are reported to management. These matters are escalated to the Human Rights Committee and/or Sustainability Committee as required. In addition, we work to improve our program through third-party expertise and input. This includes FLA accreditation, plus learnings from independent industry programs, such as Better Work.

For example, analyzing worker grievances made through the Fast Retailing Hotline helps us improve our monitoring program and strengthen our partner factories' own grievance mechanisms, helping factory management to detect, investigate and rectify issues.

We also analyze labor violation trends by country and individual brands, including how many facilities are passing or failing the Fast Retailing audit. We have developed specific country strategies for Bangladesh, Cambodia, China, Indonesia, Myanmar, and Vietnam. Countries priorities have been defined through stakeholder engagement and aligned with business strategies.

Subcontracted Factories Audits

Fast Retailing strictly prohibits production at unauthorized subcontractors in our Code of Conduct for Production Partners. Our core sewing factories are required to audit subcontractors to which they have outsourced a part of their production processes and receive approval from Fast Retailing. Subcontractors undergo the same audit as partner factories every year. If a major violation against the Code of Conduct for Production Partners is found in the audit, the subcontractor must remediate the issue within three months and pass the follow-up audit.
We also check if a partner factory uses only authorized subcontractors as part of the annual audit process.

Workplace Monitoring Results

Results of Workplace Monitoring (Evaluations of Partner Factories)

Compared to fiscal 2019, the ratio of factories evaluated as A or B slightly increased while the ratio of C or D slightly decreased. In fiscal 2020, as site visits were restricted due to COVID-19, we provided the factories with remote guidance using webcams. We also encouraged the factories' self-check and improvement activities, and these efforts have contributed to improving the overall evaluation. Our challenge has been that even in the factories whose evaluations improved in the past, new findings continue to be detected in the annual audits. We are now reviewing the current monitoring system aiming at fundamentally improving the labor management of the factories.
For the sole factory evaluated as E, we agreed with factory management on improvements and gave a strict warning that we will reduce or terminate business if violations remain unresolved.

Workplace monitoring results

AZero notable violations
BRelatively low-risk violations
CPotential violations of human rights or local occupational health and safety laws (e.g. masks, gloves, or other protective equipment not provided to workers as needed)
DMajor violations of human rights, occupational health and safety, or wage and benefit matters (e.g. locked emergency exits, errors in wage calculations)
EMajor violations, including child labor, forced labor, or other human rights violations; significant violations of occupational health and safety

Frequent Violations in Fiscal 2020

The most frequent violations of the Code of Conduct for Production Partners found in audits during fiscal 2020 are categorized in the areas of health and safety and working hours. Fast Retailing has strengthened efforts to resolve violations and take preventive measures in those areas.

Breakdown of Violations Found During Fiscal 2020

Breakdown of violations found during fiscal 2020

Health and Safety
In order to secure health and safety in partner factories, Fast Retailing conducts regular training for suppliers on local fire safety standards, new local law requirements, and good practices of health and safety management etc. When the Sustainability department visits a factory, we always check onsite if proper fire protection is in place and require immediate improvement when an issue is found. Fast Retailing has signed the Accord on Fire and Building Safety in Bangladesh, aimed at protecting workers in garment factories from building collapse and fire.

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Working Hours
Fast Retailing addresses improvement of transparency in the supply chain and strictly prohibits partner factories from submitting falsified documents. We not only monitor working hours during audits and follow-up audits, but also have strengthened internal, cross-department collaboration among the Sustainability and Production departments to address the working hours issue at our core sewing factories under our clear policy to prevent excessive working hours. The Production department follows up with our partner factories to identify the root causes and creates an improvement plan. The Production department then collects the actual weekly working hours of all employees in those partner factories every month so as to monitor the situation.

In order to reduce working hours, we noticed that our partner factories took various actions to increase productivity: investing in factory automation, optimizing production planning, training workers so they can be more skilled and adapting the compensation scheme to worker efficiency. The Production department also requests partner factories to forecast excessive working hours and inform us so that our production planning can be adjusted when possible.

The Sustainability department monitors the factories' implementation of their improvement plans and at times will verify working hours' data on site. Regular internal meetings are held to follow-up on the progress of our core partner factories. At the same time, our Sustainability department supports factories through close follow up, sharing best-practice guidelines to improve the compliance with local laws on worker wages and benefits, and to secure worker income in times when working hours are reduced. We have also established a responsible procurement policy to ensure the placement of orders according to procedures that protect the working environment of partner factories and which emphasize human and worker rights.

To promote responsible procurement, we have formulated guidelines that are in line with the procurement operations of our core brands. We conduct a yearly survey to collect feedback from core suppliers, and conduct hearing sessions to understand if our procurement practices could hinder factory efforts to reduce overtime hours. Supplier feedback is evaluated by our Production and Sustainability departments to agree on actions that will address the root cause of overtime hours in factories experiencing difficulties.

Even though we have noticed improvement at the majority of our core sewing factories, we will continue to monitor and provide support when necessary.

Due Diligence for New Production Partners

Monitoring Potential New Production Partners Prior to Commencing Business

We conduct a due diligence at any potential new partner prior to commencing business with them. This process ensures potential partners comply with our Code of Conduct for Production Partners. We only do business with those partners confirmed to meet standards for commencing new business relationships. Partner factories that receive a grade of D during the audit are asked to make corrections within three months and we start our business only once corrections are confirmed in a follow-up audit. Partner factories who had serious violations are not eligible to do business with Fast Retailing. During fiscal 2020, we initiated business relationships with 95.9 percent of potential partners.

Approval Process for New Factories

Approval Process for New Factories

Grievance Mechanisms

Grievance Mechanisms

Grievance Mechanisms in Partner Factories
Fast Retailing asks partner factories to establish their own mechanism to address employees' grievances as part of proper business management following FLA's standards. The requirements for grievance mechanisms stipulated in Fast Retailing's Supplier Guidebook include:

  • The factory shall establish written procedures and clear processes for grievance handling, including an organizational structure, responsible persons, guidelines on how to handle grievances, and anti-retaliation policies.
  • The factory shall ensure that the grievance mechanisms include at least one confidential channel.
  • The factory shall conduct and record orientation and refresher trainings on grievance mechanisms for managers and supervisors, as well as all general workforce. Surveys, feedback sessions, interviews and/or dialogues shall be conducted for verifying knowledge gained upon completion of the trainings, and the training records shall be kept.
  • The factory shall have a means to document and track grievances to ensure there is a timely response back to complainants.
  • The factory shall ensure that all grievance policies and procedures are updated according to local legislative changes and internal/external audit results.

Compliance with the above requirements is confirmed through our workplace monitoring system.
We have improved our audit process to assess functionality of factories' grievance mechanisms. For example, in 2018, our audit checklist was expanded to include additional questions on penalties and retaliation and how management logs and tracks grievances and resolutions.

In July 2019, the Sustainability Department received training on the following criteria defined in the UN Guiding Principles on functional grievance mechanisms, as delivered by a sustainability solution provider, ELEVATE:

  • Legitimate
  • Accessible
  • Predictable
  • Equitable
  • Transparent
  • Rights compatible
  • Source of continuous learning
  • Based on engagement and dialogue

An assessment tool including a worker survey and scoring system to evaluate the performance of grievance mechanisms using these eight criteria, has been developed, tested and reviewed with the support of the Fair Labor Association.

In 2020, as site visits were limited due to COVID-19, we conducted preliminary surveys based on the tool we developed. We requested 114 factories do self-assessments. We then verified the results by remote interviews and document checks. We will analyze discrepancies between the self-assessments and our verification results and collate the results with our hotline cases to evaluate the effectiveness of the assessment tool for further future improvement.

Fast Retailing Hotline for Factory Employees
We established the Fast Retailing Hotline that provides a channel for employees and organizations representing a group of individuals at core sewing factories and fabric manufacturers to contact us directly and anonymously in their local languages. These programs exist in Shanghai, Ho Chi Minh City, Dhaka, Jakarta, Tokyo, and other locations. Upon our request, Fast Retailing partner factories shall display Fast Retailing Hotline posters that are provided by us, in a location visible to workers inside their factories. We request our partner factories to communicate to workers of each factory so that they are aware of the Fast Retailing Hotline to voice their concerns, without fear of retaliation and prejudicial treatment should they raise a grievance. Workers are provided the contact details to access the Fast Retailing Hotline in their local languages and contact cards are given to workers who are interviewed during annual audits conducted by third party auditors or site visits by our Sustainability Department.

Once we receive a concern from the Fast Retailing Hotline, we aim to respond to each complainant within 24 hours. The communication can be via SMS, email, phone or other tools, depending on the technology situation in the region. Fast Retailing investigates the grievance to identify the underlying issue and takes appropriate remedial action. When we identify a human rights violation, our Sustainability and Production departments ask partner factories to make improvements and corrections in line with International Labor Organization Fundamental Conventions, local labor laws and our Code of Conduct for Production Partners. After investigation and agreement with the factory, we inform the complainants of the action and agreement with the factory on how to address the issue raised. We also ask the complainants to inform us if the actions are not implemented or if the issues reoccur. In addition, Fast Retailing verifies that agreed actions are implemented by the factory through third-party audits or through site visits by our Sustainability Department. Grievances are also reported to the Human Rights Committee. For cases involving egregious grievances, the Human Rights Committee will give advice or suggestions on countermeasures.

Fast Retailing will ensure that reports are dealt with confidentially. The Factory Hotline is handled by Fast Retailing employees and all employees are required to strictly follow the Fast Retailing Group Code of Conduct which covers the handling of confidential information and data. We protect the privacy of people who raise concerns and strictly prohibit retaliation and disadvantageous treatment against them. We commit to engage with any impacted people and reply to them in a prompt and consistent manner. We regularly confirm that our hotline is functioning effectively. For example, Sustainability Department members confirm that Fast Retailing contacts all complainants promptly once they raise a concern and that grievances are closed within an acceptable time frame for them.

We evaluated the functionality of our hotline against the eight criteria defined in the UN Guiding Principles on functional grievance mechanism, using the assessment tool we developed in fall 2019. Results will be further verified by conducting worker interviews in 2020.
Assessment results showed lower scores in "Accessible" and "Equitable" compared to other criteria, and we have implemented initiatives to improve the functionality of our hotline in these areas. To improve accessibility, we have invested in an IT platform with translation services so workers can send us SMS messages in their native language. We also provide multi-language posters so migrant workers can obtain information on how to access our hotline in their native language.
The evaluation also revealed that we need to facilitate access to local expertise or counsel for workers who have raised concerns to us. With the support of International Organization for Migration (IOM), we are mapping and screening local NGOs which can support foreign migrant workers while employed at our partner factories, or when they return to their home countries, in cases where a concern is raised via our anonymous hotline that requires specialist expertise.

To improve our hotline from 2020, we sought the views of factory workers, consisting mainly of employee representatives such as union members. So far, we have received feedback that regular explanations by factory management and posters are effective ways to ensure more workers recognize the Fast Retailing hotline. We will continue to raise worker awareness of our hotline by requesting that factories plan explanation sessions and will reconfirm that posters are placed on-site.

Factory Hotline Operational Process

Factory Hotline Operational Process

Fast Retailing Hotline Communication Flow

Grievances Related to Human Rights Violations

Among grievances raised to the Fast Retailing Hotline in fiscal 2020, 95 cases were assessed as violations of ILO core conventions, local labor laws or the Code of Conduct for Production Partners. Out of 95 cases, 89 cases were related to human rights violations such as wages and working hours' issues, harassment etc. 86 of 95 cases were closed during fiscal 2020.
Fast Retailing has also analyzed the received grievances in order to put in place preventive measures. For example, as a result of grievances and country risk analysis, we found that remedies and preventive measures on harassment issues were required in partner factories in Bangladesh, and have formulated and executed preventive measures in collaboration with experts.

Breakdown of Grievances* Received During Fiscal 2020
*Cases reported as violations of ILO core conventions, local labor laws or the Code of Conduct for Production Partners

Breakdown of Grievances Received During Fiscal 2020

Grievance Remediation Cases

  • Case 1 (Cambodia)
    In 2019, a worker representative organization contacted us regarding potential breach of freedom of association in one of our partner factories. We facilitated a dialogue among worker representatives and factory management with the support of an external mediator so both parties could reach an agreement. Another negotiation was set up by the Provincial Department of Labour and Vocational Training. Since no agreement could be reached, this case was sent to the Arbitration Council. We communicated clearly that Fast Retailing would support the Arbitration Council decision and would expect factory management to follow it. The factory agreed to comply with the Arbitration Council decision.
  • Case 2 (China)
    In 2020, a worker contacted us with questions on how wages and social insurance deductions were calculated. Fast Retailing heard the details from the worker and confirmed the correct calculation methods based on local legislation. After that, with the consent of the worker, we asked the factory to confirm the payment to the worker as well as to other workers. The factory admitted an error in calculation and paid the difference to the worker who raised the grievance. No errors were found in the payment to other workers. Fast Retailing confirmed with the worker that the payment was completed. We also requested the factory strengthen its verification process.
  • Case 3 (Vietnam)
    In 2020, a worker brought us a grievance on a manager's behavior that could be regarded as harassment. Fast Retailing visited the factory to confirm whether harassment had occurred. After that, we requested that factory address the issue to halt the manager's harassment and provide managers and workers with training on appropriate communication. We also requested the factory to strengthen their grievance mechanisms. Through confirmation with the worker who reported the harassment and interviews with other workers, we confirmed that the factory took the actions requested and that the manager's behavior had improved.

Preventive Measures and Actions Taken for Addressing Industry-wide Human Rights Issues

Fast Retailing takes preventive measures and variety of actions for solving human rights issues identified through our due diligence processes and stakeholder engagement, involving local and global experts.

Prevention of Child Labor

Child labor is a serious social issue that impedes the healthy growth of children and deprives them of educational opportunities. Fast Retailing is working to abolish and prevent child labor based on the international guidelines such as "Children's Rights and Business Principles".
Fast Retailing has been encouraging partner factories to have preventive measures against child labor in the supply chain, this is clearly stipulated in our Code of Conduct for Production Partners. In workplace monitoring, auditors check if partner factories validate the ages of workers with proper identification in recruitment.

In Myanmar, we partnered with SMART Myanmar to conduct supplier training on child labor risk and prevention, and young worker labour laws in 2018. It provided guidance on proper age verification and recruitment processes as well as on remedial actions to take if an issue is found. Following the training, partner factories developed or reinforced their internal rules and procedures and they are establishing recruiting process to check workers' age carefully.

In 2019, Fast Retailing and CCR CSR launched a program for the main factories used for Fast Retailing production located in Myanmar. CCR CSR is a social enterprise and has been a pioneer in consulting businesses on child rights since 2009. CCR CSR has extensive experience and expertise in helping companies improve, develop and implement child-rights related CSR strategies, programs and projects.
Following activities were performed.

  • Assessment of risks including juvenile and young worker non-compliance
  • Development of toolkit for the factory management including legal fact sheet, checklists, list of suitable workstations and young worker management guideline
  • Development of action plan with suggested activities to ensure proper and sustainable management of juvenile and young workers
  • Tailor made training for senior management on child labor prevention and remediation and young worker management including final confirmation of action plan and related activities. From post training evaluation, participants demonstrated a better understanding of minimum working age, working hours and best practices on child labor prevention and remediation. All factories have demonstrated corrective action in our audit findings since August 2019.

Responsible Recruitment

Fast Retailing has clarified in its Code of Conduct for Production Partners to specify that there is zero tolerance for forced labor including human trafficking. In the supply chain, migrant workers are especially vulnerable to discrimination in the recruitment process. We monitor that workers are to be treated fairly in the recruitment process and during employment.
In February 2019, Fast Retailing signed the commitment to Responsible Recruitment as defined by the Fair Labor Association (FLA) and the American Apparel & Footwear Association (AAFA) in October 2018. This is the industry's commitment to mitigate potential forced labor risks for migrant workers in the global supply chain. We will work with our global partner factories to create conditions so that:

  • No workers pay for their jobs,
  • Workers retain control of their travel documents and have full freedom of movement,
  • All workers are informed of the basic terms of their employment before leaving home.

Driven by its participation in the above commitment to Responsible Recruitment, in September 2019 Fast Retailing launched a new partnership project with the International Organization for Migration (IOM) to study the recruitment and employment conditions of migrant workers in the company's supply chains. The IOM is the leading inter-governmental organization in the field of migration. The partnership project aims to increase visibility into the company's supply chains, as well as to develop our capacity to respond to identified challenges related to the human and labor rights of migrant workers. The collaboration includes an assessment of recruitment practices carried out by our suppliers that employ migrant workers in Japan, Thailand and Malaysia. The project also includes training for Fast Retailing management, sourcing teams, and country officers to embed principles and measures protecting migrant workers in company policies and guidelines. In addition, since October 2019, Fast Retailing has partnered with the Global Alliance for Sustainable Supply Chain (ASSC), a Non-Governmental Organization (NGO) in Japan that promotes initiatives on business-related human rights and working environment issues, including those of migrant workers.

In February 2020, the IOM provided the Sustainability Department with training in supplier mapping. The purpose of the training was to strengthen the capacity of Fast Retailing to enhance labor supply chain integrity and build foundational technical skills and knowledge on ethical recruitment and on the vulnerabilities of foreign migrant workers. The training helped prepare the Fast Retailing Sustainability Department for engagement with suppliers in Thailand, Japan and Malaysia, and to identify and address key risks of exploitative recruitment practices and labor conditions.

The IOM also welcomed representatives of ASSC and the Fair Labor Association (FLA) to this training, seeking to strengthen collaboration and develop joint action towards promoting human and labor rights of migrant workers.

After the training, participants had a better understanding of specific vulnerabilities of foreign migrant workers and forced labor risks in supply chains. We identified actions to address these risks through closer supplier engagement and improving international recruitment practices in line with Fast Retailing's commitment to Responsible Recruitment as defined by FLA and AAFA.

In 2020, with the support of the IOM, FLA and ASSC, we established the Fast Retailing Standards and Guidelines on Responsible Recruitment of Migrant Workers for Production Partners (the Guidelines) and the methodology to assess compliance with the Guidelines by partner factories.

The Guidelines stipulate the following principles:

  • No workers pay for their jobs
  • Workers are informed of the basic terms of their employment before signing employment contracts
  • Workers retain control of their identity, travel and any other documents

The Guidelines also stipulate the requirements of partner factories and provide detailed guidance on how to comply, as outlined below:

Policies and procedures

  • Partner factories shall establish policies and procedures to respect migrant workers' human and labor rights, including those that prohibit charging workers any recruitment fees or employment-related costs directly or indirectly. Production partners shall designate teams to be responsible for implementing and monitoring these policies and procedures.

Due diligence on labor recruiters

  • Partner factories shall conduct ongoing risk assessments on labor recruiters involved in factory recruitment processes, and will confirm compliance with laws, regulations and the Guidelines. In these assessments, partner factories shall confirm whether labor recruiters follow each requirement, such as providing pre-employment orientations that cover terms of employment, job description, and wages and working hours, in a language applicants understand.

Corrective action

  • Partner factories shall develop corrective action plans to remediate violations of laws and regulations and the Guidelines, as well as violations made by labor recruiters. Partner factories shall terminate relationships with labor recruiters who do not cooperate with assessments, or who are unwilling or unable to remedy violations within a reasonable timeframe.

Access to remedy

  • Production partners shall ensure migrant workers are informed about grievance mechanisms, and have open and direct access to these mechanisms. When human rights violations are identified, partner factories shall address the violations and provide a remedy to the aggrieved individuals.

In 2020, we held explanatory sessions for partner factories with foreign migrant workers located in Japan, Thailand and Malaysia to announce and promote their understanding of the Guidelines. Subsequently, we started the assessment of the partner factories on their compliance with the Guidelines. In the assessment, our Sustainability Department members conducted document reviews and interviews with factory management and workers. We will continue to require and help our partner factories to develop and execute corrective action plans in response to findings. When violations are not resolved, we escalate these matters to the Fast Retailing Business Ethics Committee, which discusses the potential impact on the financial situation of the partner in question and the risk of workers' dismissal. The committee then determines whether to terminate or modify our business relationship and makes recommendation to the Production department.

Coercion and Harassment

Coercion and harassment is an issue that can lead to adverse effects on the working environment and workers' physical and mental health. For a healthy working environment, it is crucial that workers can work without fear of coercion and harassment. Fast Retailing does not accept any forms of coercion and harassment and clearly stipulates in our Code of Conduct for Production Partners that all workers shall be treated with respect and dignity.
As a result of grievances and country risk analysis, we found that remedies and preventive measures against harassment issues were required in partner factories in Bangladesh. Subsequently in 2019, we launched a pilot project to put in place a complaints committee in some of our partner factories partnering with two local NGOs in Bangladesh, Awaj Foundation and Change Associates Ltd. The committee must consist of at least five members, the head of the committee and the majority of its members must be female, and two members must be from outside of the factory. The committee is to establish anti-harassment policies and guidelines, investigate issues and conciliate harassment cases. The committee will meet every second month. Management, workers and committee members were trained by the NGOs to gain basic knowledge on harassment through open discussion on concrete cases of inappropriate language and behaviors.

Through the project, we recognized a need to support our factories in the selection of worker representatives and external committee members. To expand the plan in 2020, we provided support for 13 factories in Bangladesh to form complaints committees partnering with Change Associates Ltd. All 13 factories formed complaints committees, establishing anti-harassment policies, guidelines and standard processes to manage the committees. Also, two employees per factory received three-days training to become trainers and lead the project at each factory. They carried out training on gender equality and the committee's roles and functions for middle management and all employees at each factory. Fast Retailing's sustainability team in Bangladesh provided further extensive training to complaints committee members and conducted functionality assessment of the committees. Our target is to extend the project to cover all partner sewing factories in Bangladesh by the end of 2021.

Wages and Benefits & Living Wage

In order to ensure fulfilling and stable lives of people working in the supply chain, Fast Retailing aims not only to guarantee minimum wages, but also to realize living wages. To meet legal requirements regarding wages and benefits, we set clear goals to reduce the number of audit findings on wages and benefits, and working hours. Our Sustainability Department supports factories through close follow up, sharing good practice examples to secure worker income while working hours are reduced.
In the Fast Retailing Code of Conduct for Production Partners, we state that a living wage should be at a level which not only satisfies workers' basic needs for clothing, food and housing, but also enables workers' decent lives.
Fast Retailing is a member of the Fair Labor Association (FLA) which established a commitment to fair compensation in 2015. The FLA uses compensation data collection methodology derived from the Ankers' methodology of the Global Living Wage Coalition and various civil society organizations' expertise in setting living wage benchmarks and understanding workers' basic needs from a local perspective. Fast Retailing will analyze compensation data and how it is paid in our partner factories in collaboration with FLA to understand how solutions can be implemented to address identified wage gaps.

Partner Factory Training

We conduct regular training to ensure partner factories understand the Fast Retailing Code of Conduct for Production Partners and the latest in labor standards, etc. For example, we offer programs that cover revisions to the code of conduct, fire prevention safety standards, correct pay calculations for overtime work, and other matters. During fiscal 2020, we conducted training for a total of 489 factories across 22 different countries.

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